Are You Interested in Deferred Payment?
Is Deferred Payment Counterproductive?
Apple Pay and Google Pay provide convenient digital transactions. Yet online 30-day billing requests are common. Establishing a feasible backend system is challenging. E‑commerce stores are designed to promptly exchange products for advance payment. Digital products are instantly available for download. Physical products must be picked, packed, shipped and sometimes ordered from third parties or manufactured. With 15-, 30- or 60-day billing, the production workflow continues unfunded.
Allowing customers to pay at a later date introduces a new set of accounting costs. Many companies requesting a line of credit often have their own vendor account requirements. This varies from completing a half-page form to filling out a 16-page document. Simultaneously, requirements for internal billing systems must be met. Credit checks, billing discounts, interest fees for late payment, dunning, and collection procedures need to be in place. Establishing a vender and accepting deferred billing is a bilateral approval process.
You could end up losing 10 percent or more of each sale.
Results from whatever terms are approved for the applicant must be integrated into a seamless online shopping experience. At minimum, this may involve including a field for a purchase order (PO) number and bypassing online payment. A more elegant solution validates multiple purchasers and credit limits. To save programming, companies may use a semi-manual workflow, often accepting on-account purchases via email.
The credit card industry already has the 30-day billing infrastructure in place. If you know when card payments are due, you can make a card purchase one day afterwards for it to appear on the next billing cycle. Recreating the infrastructure on a customer-by-customer basis is counterproductive from a business standpoint. Your company becomes a banker or pays another company to administer the accounts.
Online Invoicing Options
An alternative to invoicing is an installment payment service. Square provides installment payment options for 3, 6 or 12 months for purchases between $250 and $10,000 meeting certain criteria. Companies like Stripe, PayPal, Square and Due offer invoicing and recurring payment solutions. Klarna is limited to consumers, not business-to-business. Getting some alternative invoicing solutions to work automatically with an existing secure online storefront may require a programmer. A company called PayWhirl integrates recurring payments into Shopify and other platforms for a service fee on top of typical credit card transaction fees.
You could end up losing 10 percent or more of each sale by the time you factor in fees, lost interest from deferred deposits and extra administration. This may affect product or service prices and discounts offered.
Ideal Circumstances For Deferred Billing
Despite the time effort and expense in setting up deferred billing, it remains the preferred payment method in some industries. Hospitals, universities and Fortune 500 companies typically defer most if not all vendor payments. Credit cards are inefficient for accounts payable departments that process hundreds of thousands or millions of dollars monthly.
Hospitals, universities and Fortune 500 companies typically defer most if not all vendor payments.
Beyond the size of the company, prompt payment is most important. Large corporations can easily overtax cashflow of small businesses. So credit is not necessarily based on what the payer can afford. It is issued based on limits the payee can reasonably extend without negatively impacting normal workflow.
Deferred Billing From ClinicalPosters
ClinicalPosters can generate a digital draft (pro-forma) invoice for you. It includes a payment button that activates the order. Just email a list of desired items along with your delivery and billing addresses.
Tips to Speed Corporate Checkout
Ready for checkout but no company card? If you are part of a large organization, establishing a line of credit can be daunting. Likely your first reaction is to ask to be billed. However, the time that elapses for your company to establish ClinicalPosters as a vendor and for ClinicalPosters to approve your company with a line of credit can span weeks. Here are some suggestions:
- Ask to use your employer’s credit card.
- Ask accounts payable to make payment.
- Use your personal credit card and submit invoice for reimbursement.
- Ask for pro forma invoice to submit to accounts payable for paper check or electronic draft (ACH).
- Complete credit application or forward information to purchasing department.
Upon approval, discretionary ClinicalPosters invoicing is possible through one of these vendors:
- Due — Invoicing; recurring payments
- PayPal — Invoicing; installments; recurring payments
- Shopify — Invoicing with inventory integration
- Square — Invoicing; installments
- Stripe — Recurring payments
Some third-party vendors like Square require manual inventory synchronization. This can delay invoicing.